Are you wondering how to price your services? Here’s what you need to know about norms and the psychology behind pricing.
Pricing is one of the most important things you will do for your event planning business. We are not talking about event pricing.
We are talking about the fee you charge your clients.
Too high and no one will pay. Too low and they’ll question your skills. Too high without credentials and you’ll look like a phony. Too low with credentials and you’ll look desperate.
But what is too high and what is too low and what sort of pricing strategies can make you more appealing to clients?
Newbie business owners often price their service with a marginal profit but they don’t always take into account the cost of doing business like insurance and taxes. If you’re just figuring it all out, you’ll want to take the following things into consideration:
The following points affect your pricing as an event planner.
Who are you serving? If you want to serve luxury event hosts, you can’t sell on bottom-of-the barrel pricing. While there are some people of means who are looking for the least expensive option, they won’t go with cheap. They want value. It’s a subtle difference and while it might mean the same to many of us, in marketing there is a difference.
Yes, the market will dictate your rates but so will your specific niche. A celebrity party planner will charge a very different amount than someone working for a private school, even if they’re working in the same city.
Different industries or clients expect to pay in different ways. For instance, most wedding planners charge by the hour with some upcharges for additional services. A corporate planner, on the other hand, may charge a flat fee or a per activity charge, rather than an hourly rate.
Some industries require an itemized list of estimated expenses. Make sure you know that ahead of time before submitting quotes. Figure out what type of charge is customary for the field you work in before setting your fees. A social media group of your local peers is a good place to start if you’re not sure what clients in your niche prefer or require.
Just as living in New York City is more costly than living in Columbus, Ohio, what event planners charge is also based on geographic area. Since an event planner can work anywhere and host events in all different markets, many set their pricing based on what the market in the city or town their client resides in will hold. If you have a client in Los Angeles, for instance, what they’re used to paying for a corporate event will be very different than someone in Topeka, Kansas. Set rates your clients are used to seeing.
Types of Pricing
Once you figure out what your niche, market, and clients will hold, it’s important you figure out how you want to charge. Most event planners charge one of these ways:
- A fixed hourly rate. This can be anywhere from $20 on up. Most clients paying an hourly rate will want to know how many hours you expect the planning to take. With an hourly rate, you’re getting paid for the hours at the event but also the hours of coordination ahead of time.
- A flat fee. You review the requirements with the client and then present the price. Many clients like this approach because they know exactly what they will pay, but if you’re not good at estimating the time spent on the job, you’re likely to take a hit in this type of payment.
- Percentage of profits. This is a popular means of payment for those working in fundraising events. Your fee is based on a percentage of what the group raises. In this type of pricing, you need to be sure that you can fill the seats or you could be working for pennies on the dollar. Some event planners work for a percentage (usually between 15-20%) of the total cost of the event that way they know what they’ll make regardless of how many people they bring in.
- Commission. A minority of event professionals base their fees on receiving commissions from venues, travel agents, and/or hotels. While these can be lucrative, it’s probably not your only pay. However, some clients are aware of these perks and may look down on “double dipping,” getting paid by them and a venue for the same services. Commission works well when you’re planning an event with a client who can’t quite pay you what your rates are, such as working for a nonprofit you believe in.
- Hourly + expenses. The final way to price your projects is to charge hourly, with add-ons to cover expenses.
Keep in mind many event planners are project managers and will subcontract out portions they don’t directly handle themselves, such as flowers, and then bill the client 15-20% over their cost of those services. This can also include things like printing and mailing.
Psychology of Pricing Tips
There is psychology behind pricing. Such as:
- Using bundle pricing. People often opt for it assuming it’s a better deal, like the meal deals at fast food, but really it just makes decisions (and upsells) easier.
- Knowing your client. Are they interested in a luxury experience or cheap pricing? Frame your charges with the appropriate words that they’re looking for.
- Including what people don’t want to pay for tucked away in your fees. It’s better to increase your price and include (in a hidden way) something people don’t want to pay for, than it is to charge for it. For instance, some companies offer free shipping over a minimum purchase. Are they eating the shipping? Hardly. You can assume it’s in there somewhere. Most consumers dislike shipping so much they will often pay more for the product or buy an additional item. If there’s a charge you’ve noticed clients always question, either eliminate it and hide it somewhere else or offer an upgrade that would waive that fee.
Additional Pieces to Consider
Almost all event planners charge a deposit for their services at the time the contract is signed. This is important because you are holding space open for that client and you may not be able to book another at that time. You’ll also want to collect for services before the event. Don’t get caught putting in hours you’re never paid for.
Some people just need a consultation and some planning advice. Others may seek out your services for theme ideas or day-of coordination. They may not be able to afford your full package so a little bit of assistance is what they’re looking for. This type of activity is usually charged by the hour and offers a nice fill-in between events since the time invested is minimal.
Setting your fees is one of the most critical things you can do for your business. Not only does it impact how much bread is on your table, but clients become the basis for referrals and repeat business. If you set your fees too low, you get stuck in a hole that is difficult to crawl out of. On the other hand, if you set them higher than your experience dictates you may find it difficult to attain clients. Do your research and find that sweet spot and adjust as you need to. Since every project is priced individually, you can do some experimenting to find what works in your niche.